Assets can be broken down into Current Assets, as well as Long Term Assets. Current assets are those that you will use within 12 months, while Long Term Assets are those that are there fort longer than 12 months.

Current Assets

• Cash in Chequing

  This represents the amount of cash in your bank chequing account.

• Cash in Savings

  This is the amount of cash in your bank savings account.

• Cash on Hand

  This is any cash in your business that you have on hand and not in a bank account. For example, cash in registers at a retail store would fall under this category.

• Accounts Receivable

  This is to keep track of payments from customers that have paid using credit. Note that credit cards do not fall under this category because you are paid immediately from the bank. These can be labeled as "AR — [Customer Name]".

• Inventory

  Here you can keep track of the dollar amount of the inventory you currently have on hand.

• Prepaid Insurance

  This is money set aside to pay for insurance. Money is taken out of this balance when paying for insurance.

Long Term Assets

• Land

  This asset is reserved for the price of the land purchased. Note that this does not include the building itself, because land does not depreciate, but the building on it does.

• Buildings

  Use this asset to keep track of the value of the buildings on your land for your business. Note that this asset undergoes asset depreciation.

• Leasehold Improvements

  This asset represents upgrades to a leased property. For example, when running a business in a shopping mall, it normally comes as an empty room, and you must spend capital to furnish it. This asset also undergoes asset depreciation.

• Vehicles

  This asset represents any vehicles (e.g. cars, trucks, etc.) that are bought by the business. If the vehicles have any improvements to them, include that in the value applied to this asset. The Vehicles asset undergoes asset depreciation as well.

• Furniture and Fixtures

  This asset represents all furniture and fixtures, including chairs, desks, shelves, and such. This asset also undergoes asset depreciation.

• Equipment

  This asset represents all equipment that is kept for over a year. This can include computers, copy machines, and other equipment required for your business to run smoothly. This asset also undergoes asset depreciation.

• Accumulated Depreciation

  This family of assets is used to keep track of the depreciation value of assets that undergo asset depreciation. It is ideal to have multiple "Accumulated Depreciation" accounts, each titled "A. Depreciation — [Asset Account]". Asset depreciation will be discussed in more detail later on.

• Patents

  This represents the amount of money the business has spent on gaining specific patents. Note that because patents are only valid for a certain period of time, they undergo amortization (which is depreciation for intangible assets).

• Copyrights

  This represents the amount of money required to establish copyrights. As copyrights expire after a certain period of time, they also undergo amortizaton.

• Accumulated Amortization — Patents/Copyrights

  This is where you record the depreciation of your patents/copyrights.

• Goodwill

  Only use this asset if you have purchased another business for over the market value of all that business' net assets. This account is used to keep track of intangible assets owned by that business, such as store locations, business reputation, customer loyalty, and such.

If your asset does not fall into one of these categories, you can put in under a generic umbrella account such as "Other Assets", and move the asset to a different asset account at a later date.

As mentioned early, Owner's Equity (CR) represents the equity of all shareholders/partners in the business. Accounts of this type include:

• Common Shares

  This account is only needed for corporations. It is used to keep track of the investors contributions to the business.

• Retained Earnings

  This equity account is also only needed for corporations. This account keeps track of all profits and losses accumulated since the business first opened, updated yearly.

• Capital

  This set of equity accounts is for unincorporated businesses — you need one account for each owner within the business. This set of accounts allows you to keep track of who invested what into the business, whether it be cash, a vehicle, land, and any other such assets. Any profits or losses are accumulated into the various Capital accounts after certain periods of time.

Expenses are accounts that take money out of your assets to pay these accounts. Note that it is the combination of the amounts in both revenue adding expenses that determines whether your business had a net income or loss. Note that Cost of Goods Sold falls under Expense accounts.

Cost of Sales Expenses

• Sales Discounts

  When you provide discounts for earlier payments, this account will hold that value as a cost to you.

• Volume Discounts

  This account holds discounts for large volume purchases or for fostering better relationships with customers. This account holds this value as cost to you.

• Sales Returns and Allowances

  When the customer returns an item or is given a discount for a defective item (of which they would in turn keep), the cost of this goes into this expense account.

• Purchases

  This expense account is used to store the total cost of goods you wish to sell.

• Freight-In Charges

  This expense account is used to store the amount of money spent on shipping costs when purchasing products.

Other Expenses

• Loss on Disposal of Fixed Assets

  If you sell a fixed asset at a loss, then that amount would go into this account. Note that loss is dependent on the depreciated amount of the asset, much like with Gain on Disposal of Fixed Assets mentioned above.

• Advertising and Promotion

  Any money spent on advertising and promotion, such as TV ads, Google ads, printing/distribution of flyers, and such, is kept track of in this account.

• Automotive Expense

  This expense account tracks money spent on the maintenance of vehicles.

• Bank Service Charges

  This account tracks the amount of money spent on bank fees (e.g. chequing account fees, E-transfer, etc.).

• Depreciation and Amortization

  A consolidated expense account that keeps tracks of all depreciation/amortization.

• Dues and Subscriptions

  An expense account for keeping track of all subscription services that your business uses.

• Equipment Rental

  The fees for any equipment that is rented for business purposes would fall under this expense account. For example, truck rental for the purpose of moving business goods would fall under this category.

• Interest

  Any interest that arises from borrowed money would go under this expense account.

• Insurance

  Fees for insurance would fall under this set of expense accounts. Note that you should most likely make different insurance expense accounts for different things (i.e. car insurance and home insurance would be different accounts).

• Legal and Accounting

  When the business pays for any legal or accounting services, those expensese fit in here.

• Maintenance and Repairs

  Anything used to maintain fixed assets or improvements to rental property would fall under this expense.

• Miscellaneous Expenses

  Use this expense account for when you have expenses that do not fall into any other category (use this account at your discretion).

• Office Expense

  Any supplies needed for the office to run smoothly, such as paper and pens, which do not fall under Fixed Assets would fall into this expense account. If you wish to keep track of a specific office expense, such as pens, you can make a separate Office Expense account just for pens.

• Payroll Benefits

  Things like retirement benefits and employment insurance for workers would fall under this category.

• Postage and Delivery

  This set of accounts keeps track of the amount of money the business spends on delivery goods. You may wish to keep track of different delivery companies to see where exactly you are spending your money. Note that this is different from Freight-In Charges, which only applies to the cost of shipping in the process of purchasing goods to sell.

• Rent Expense

  Any expenses coming from the rental of property, such as rented office space or rented desks, fall into this category.

• Salaries and Wages

  Use this expense account to keep track of the wages you have paid your employees (it may be helpful to keep vacation pay in a different account).

• Supplies Expense

  Use this expense account for business specific supplies that do not fall under Office Expense.

• Travel and Entertainment

  Expenses that arise from employees needing to travel and for entertainment purposes (e.g. box seats at a basketball game) would be kept track of here.

• Telephone and Internet

  Use this expense account to keep track of money used to pay for telephone and internet.

• Utilities

  This expense account is used to keeping track of utilities such as water, heating, and electricty.